Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72

Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T [2021] VSCA 72 | Case summary | Zoe

[105]

Gardner Group submits that LU Simon was the principal contractor with control over the Lacrosse project. Its obligations were contained within a D&C Contract and it was obliged under s 16 of the Building Act to construct buildings that comply with the building permit and which comply with the Building Act, Building Regulations and the BCA. It continues:

Section 16 makes it apparent that a builder does not discharge its obligations merely by building a building in accordance with a building permit (in other words, merely by relying on the work of the [relevant building surveyor]). The builder is independently fixed with liability, pursuant to an offence provision, to construct buildings that comply with the BCA. If liability is established against Gardner Group and Mr Galanos for permitting the use of an ACP containing a 100% polyethylene core on the external façade of the Lacrosse building, then LU Simon must be fixed with liability in respect to the same wrongful conduct.

Similarly, Elenberg Fraser submits that:

As a tier 1 or close to tier one builder, LU Simon is expected to know the material aspects of the BCA relevant to its construction obligations [citing the evidence of the expert building surveyors]. Under the D&C Contract, LU Simon was required to manage the design process and procure the permit to construct and under the T2 Specification it was required to select a compliant design/product. When LU Simon selected the material it ought to have known that ACPs, and in particular the PE core, were combustible ... [Mr Moschoyiannis][[26]] may well have relied on the consultants to advise him to the contrary, but he was negligent as a builder not to undertake a more detailed investigation of the materials and design.

Thomas Nicolas' submissions refer primarily to matters relating to the selection of Alucobest, but observe that:

It seems curious that Mr Moschoyiannis claimed to be knowledgeable about PE in the context of HDPE, yet claimed he didn't know it was a plastic, or combustible when discussing Alucobond (PE). Accordingly, his evidence of his knowledge of PE-cored ACPs must be treated with caution.

After referring to evidence of Mr Moschoyiannis that he did not know that there was any risk with an ACP because 'it's protected by aluminium laminate covers', Thomas Nicolas also observe that: 'Implicit in this answer is that Mr Moschoyiannis knew that PE posed a fire risk in Alucobond (PE) panels and that from reading the Alucobond brochure, the risk of fire of the PE was protected by the aluminium laminate covers'.

Unsurprisingly, the Owners argue against a finding that LU Simon failed to take reasonable care. Such a finding would open up the possibility of LU Simon being entitled to a reduction in its liability to the Owners as a 'concurrent wrongdoer' within the meaning of Part IVAA of the Wrongs Act. The Owners submit that: 'the evidence in this case does not suggest any failure to take reasonable care on LU Simon's part'. They argue:

The installation of the Alucobest panels at Lacrosse resulted from a deliberate decision to use those panels for the external cladding. The fact that they did not meet the statutory warranties given by LU Simon, because they were not compliant or fit for purpose, does not of itself constitute a lack of reasonable care. To find that the choice of Alucobest was a failure to take reasonable care would be effectively to open the doors to such an argument in almost every case; as a decision that is subsequently found to be incorrect could almost always be constructively treated as if the decision-maker, by making the wrong choice, had failed to exercise reasonable care.

Dealing first with Thomas Nicolas' submission urging caution in considering Mr Moschoyiannis' evidence, that evidence was summarised in LU Simon's submissions as follows:

Like many other people, Mr Moschoyiannis did not know that polyethylene was a flammable material. Further, Mr Moschoyiannis had seen aluminium composite panels being used in the industry since he graduated from University in the 1980s and had no reason to be concerned about their use. Mr Moschoyiannis was, like so many others in the industry, misinformed by the material which Alucobond published at that time. See also the Alucobond brochure 'Alucobond - 40 years of excellence - From a Pioneer to the Synonym'. Similar comforting statements were made in the Alucobest brochure ..., where in addition to reference to various ASTM test results, it is stated that Alucobest has 'Outstanding characteristics of fireproofing' next to an image of a flaming match.[27]

[166]

The Davis Report was not mentioned in the Second Reading Speech or the Explanatory Notes to the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), which introduced Pt 4 of the Civil Liability Act. This may be because some seven years had passed since the release of the Davis Report. In the Second Reading Speech it was suggested that the provisions were directed not only to problems regarding insurance but also, as the title to the amending Act suggested, to defining the limits which should be placed on personal responsibility. Nevertheless, there is a clear connection between the Davis Report and Pt 4 of the Civil Liability Act. In 1996, the Standing Committee of Attorneys-General released draft model provisions which reflected the recommendations of the Davis Report. The draft model provisions were eventually adopted, in substantially the same form, in Pt 4 of the Civil Liability Act in New South Wales and by the other States and Territories.

The evident purpose of Pt 4 is to give effect to a legislative policy that, in respect of certain claims such as those for economic loss or property damage, a defendant should be liable only to the extent of his or her responsibility. The court has the task of apportioning that responsibility where the defendant can show that he or she is a 'concurrent wrongdoer', which is to say that there are others whose acts or omissions can be said to have caused the damage the plaintiff claims, whether jointly with the defendant's acts or independently of them. If there are other wrongdoers they, together with the defendant, are all concurrent wrongdoers.

The purpose of Pt 4 is achieved by the limitation on a defendant's liability, effected by s 35(1)(b), which requires that the court award a plaintiff only the sum which represents the defendant's proportionate liability as determined by the court. For that purpose, it is not necessary that orders are able to be made against the other wrongdoers in the proceedings. Section 34(4) provides that it does not matter, for the purposes of Pt 4, that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died. Thus under Pt 4 the risk of a failure to recover the whole of the claim is shifted to the plaintiff.[59]

[170]

It seems to me clear that a person will be a 'concurrent wrongdoer' only if the court makes findings about the existence of 'loss or damage' and about which acts or omissions 'caused' the loss or damage. It is only when those findings are made that it is possible to identify, as contemplated by s 34(2), each person whose acts or omissions, as found, 'caused' the 'loss or damage', as found. At that point, and not before, a person can be seen to be a 'concurrent wrongdoer'.

The relevant 'claim' - that is, the claim in relation to which the identified person is a 'concurrent wrongdoer' - can only be the claim in respect of which the findings concerning loss or damage and causation are made. That claim is, of necessity, a claim already litigated, not a pending or foreshadowed claim. Its nature and content (and, therefore, its status under s 34(1)) will be discoverable by looking at the findings that cause it to be determined as it is determined. If, on those findings, it is seen that the loss or damage (as established in 'an action for damages') arose from a failure to take reasonable care and did not arise out of personal injury, the case will be within s 34(1)(a); and if it is seen that there was a contravention of s 42 of the Fair Trading Act, the case will be within s 34(1)(b). In either such case, the already litigated 'claim' will be an 'apportionable claim' because of s 34(1) and, if, on the findings made, the acts or omissions of several persons 'caused' the 'damage or loss' as found, the persons will be 'concurrent wrongdoers'.

The need to know the outcome of the claim in order to apply Pt 4 is emphasised by s 34A. The operation of that section - and, therefore, the ambit of Pt 4 as a whole - depends on the ability to know, among other things, whether a person 'intended to cause' or 'fraudulently caused' the 'loss or damage ... that is the subject of the claim'. These things can be judged only after the loss or damage and its causes have been identified through a process of fact finding and analysis. Viewed in prospect and in its pending state, a claim might allege an intentional or fraudulent act or omission, but it is impossible to say, at that point, whether any loss or damage was caused and, if it was, what caused it - in particular, whether it was intentionally caused or fraudulently caused.

On this basis, the nature of a 'claim', for the purposes of Pt 4, will be determined by what the court has decided in the case, not by what might be prayed or pleaded in an initiating process or points of claim. In short, 'claim' refers to a claim as proved and established, not a claim as made or advanced.[62]

[228]

remain fully responsible for the services (as defined in the Elenberg Fraser Agreement) carried out by it;[97]
where appointed as principal design consultant (which it was),[98] be responsible for the proper coordination and integration of the work of all other consultants appointed by LU Simon into the design of the works;[99]
prepare the contract material (ie documents and materials created or required to be created under the Elenberg Fraser Agreement and to be handed over to LU Simon) so that it was fit for the purposes of the project, having regard to the assumptions that Elenberg Fraser could be reasonably expected to make exercising the knowledge, skill and expertise of an appropriately experienced, competent and qualified architect in accordance with sound professional principles;[100]
prepare the contract material in a manner consistent with the requirements of the client brief and to satisfy all legislative requirements applicable to the design of the work including, without limitation, all applicable requirements of the BCA, Australian Standards and Authorities' requirements;[101]
inspect the works during construction for compliance with the client brief, contract material and all legislative requirements applicable to the services, exercising the knowledge, skill and expertise of an appropriately experienced, competent and qualified architect;[102]
indemnify LU Simon against claims against LU Simon caused by the negligent or wrongful acts or omissions of Elenberg Fraser;[103]
accept all design risk and liability in all contract material prepared by it, whether prepared before or after the date of the Elenberg Fraser Agreement;[104] and
be liable to LU Simon with respect to the performance or non-performance of the services, whether such liability arises under the law of contract, tort or otherwise including, without limitation, liability for any defects, including latent defects, in the services (whenever those services were carried out or performed and whether carried out or performed before or after novation).

[234]

it is clear from the language used in the T2 Specification that it required LU Simon to comply with the regulatory requirements in operation at the time, by adopting whichever pathways LU Simon preferred to adopt in order to satisfy the performance requirements of the BCA;
the T2 Specification included performance requirements with which LU Simon was obliged to comply, including by the provision that: 'The performance criteria included in the Specification sets the minimum standards with which the Design Documents solutions shall comply';
the intention of the reference in cl 1.31, 'Fire' of the T2 Specification to 'non-combustible' and 'not easily ignitable with low flame spread characteristics' was to ensure the LU Simon complied with both AS 1530.1 and AS 1530.3, depending upon the product and its intended use;
the inclusion by Elenberg Fraser of ACPs in the Preliminary Design Drawings and the T2 Specification as part of the external facade of the Lacrosse building, was not contrary to the BCA because LU Simon was able to select one or another or a combination of the BCA pathways in order to establish compliance with performance requirements of the BCA;
LU Simon was permitted under the T2 Specification and the D&C Contract, and consistently with the BCA, to select a cladding product in Alucobond's range of products or a different cladding product indicative to Alucobond which met the performance requirements of the BCA by an alternative solution or by the DTS [deemed-to-satisfy] provisions;
although LU Simon would not have been able to establish compliance with the BCA by the DTS provisions for a 100% polyethylene core product, LU Simon was at liberty to seek an alternative solution for the polyethylene product it had selected and then proceed to comply with the performance requirements of the BCA in liaison with Thomas Nicolas and Gardner Group;
but whatever product LU Simon selected had to be non-combustible in accordance with AS 1530.1 and the performance requirements of the BCA via one of the permitted pathways; and
accordingly, the mere fact that Alucobond was referred to in the T2 Specification did not cause Elenberg Fraser's design to be 'non-compliant', because compliance with the BCA was possible - just possibly not by the DTS provisions of the BCA.[106]

[327]

In my view, the phrase 'bonded laminated materials' describes materials that have been through a process of lamination. In that sense, the phrase is synonymous with Gardner Group's first definition of 'laminate' and the dictionary definitions to which it refers:

The Oxford Dictionary (relevantly) defines 'laminate', when used as a noun, as 'a laminated structure or material'. The Macquarie Dictionary defines 'laminate', when used as a noun, as 'a material made by bonding together, usually under pressure, two or more thin layers'.

The term 'laminate' clearly can be used (depending on context) to mean both the composite product and each of its layered parts. It is therefore unsurprising that the drafter of the provision would use a more comprehensive phrase for the composite product ('bonded laminated materials'), before turning to deal with its component parts (comprising the individual laminates and the bonding agent). Indeed, 'laminated' (the term found in both the chapeau and in clause C1.12(f)(iv), which also refers to the laminated whole) is defined by the Oxford Dictionary as follows:

Consisting of, arranged in, or furnished with laminae; formed or manufactured in a succession of layers of material, as some metallic objects, etc ... Now common as a designation of various manufactured materials made by lamination, as laminated glass, a material consisting of two outer layers of plate or sheet glass attached to an inner layer of transparent plastic; laminated plastic, a more or less rigid material made by bonding together, usu. by means of heat and pressure, layers of cloth, paper, or the like that have been impregnated or coated with a synthetic resin; laminated wood, layers of wood bonded together with the grain in adjacent layers parallel (in contrast to plywood); also laminated spring, a leaf spring.

And, for completeness, 'bond' is relevantly defined as follows:

... in Building: To bind or connect together (bricks, stones, or different parts of a structure) by making one overlap and hold to another, so as to give solidity to the whole; to hold or bind together by bond-stones, clamps, etc

Thus the process of lamination that results in a 'bonded laminated material' involves the binding or connecting together (relevantly, by an adhesive) of a succession (that is, two or more) of layers of one or more materials. Having identified the composite product in those terms, followed by the word 'where' (in the sense of 'in which'), I consider that the immediately following expression 'each laminate' can only refer to each of the bonded layers that together comprise the 'bonded laminated' whole.

It is true that the bonded laminated materials in issue in this case are ACPs that happen to comprise three successive layers (not two, four or more) and that the second or middle of those successive layers is a different material from the first and third. But to contend that these factors alter the character of the middle layer, so that it ceases to be a layer or laminate and becomes a 'core' within an otherwise 'bonded laminated material', to my mind defies both logic and common sense.

...

Read this way, laminate, laminae and layer are indeed interchangeable. Using 'laminate' is to my mind a logical choice, as the singular noun describing the [sic] each of the components that have been 'laminated' by being 'bonded' to form the 'bonded laminated material'. The term 'laminae' is obscure and not an obvious choice of the singular noun for inclusion in the BCA. And while using 'layer' might have left less room for debate, it does not follow that 'laminate' must therefore be construed to mean something different.[145]

[368]

I have set out above how I consider C1.12(f) should be construed. I have also explained why, in my view, a building surveyor is in a good position to question the logic of the putative alternative construction and can generally be expected to take positive steps to clarify any uncertainty. I consider that the contrary position represented by the Relevant Practice is both irrational and unreasonable. There is no evidence of any of the experts, individually or collectively, subjecting the Relevant Practice to robust scrutiny of the kind discussed by Lord Browne-Wilkinson in Bolitho and, perhaps for this reason, it does not withstand logical analysis.

For the reasons discussed, it is not logical for a provision to so precisely prescribe the thickness of permitted combustible adhesive and completely ignore another equally combustible element that could be more than twice as thick. At an even more general level, it is not logical for a prescriptive exception to a blanket requirement for non-combustibility, to fail entirely to deal with a highly combustible element comprising at least 50% of the product.

The suggested explanation that this combustible element is addressed by C1.12(f)(iv) (the test under AS1530.3), is also not logical. As discussed above, if that test is sufficient to accommodate the potential combustibility of a polyethylene core and thus justify its omission from C1.12(f), why is it not also sufficient to accommodate the potential combustibility of the adhesive, which is also wholly encapsulated by the aluminium layers? As Mr Kip explained:

The - the other thing I would say, coming back to clause C1.12, is that the argument that we would have strict controls about glue thickness, but you could ignore the core - to me defies logic. It's common in the industry for what are called sandwich panels ... to be up to 250 mil thick. It's certainly very common to have 75 mil or 100 mil thick panels that are polystyrene or polyisocyanurate or polypropylene - all sorts, with a steel cladding system. And to say that because the steel is there - that steel will help that material pass any 1530 part 3 test - but to say that you can ignore a core of any dimension, but that the glue must be no more than one mil thick - to me defies common sense.

I have suggested above that consulting a fire engineer would have been a reasonable step for a building surveyor to take to confirm or test their reliance on C1.12(f) as a compliance pathway for ACPs. It is worth noting that, had they done so, the evidence is clear about the response they would have received. All of the fire engineers (including Mr Nicolas) considered that ACPs with a 100% polyethylene core did not meet the DTS provisions of the BCA. Even the expert architects disagreed with Mr Galanos and the Gardner Group Experts. Mr Quigley said: 'Well I would've considered [the polyethylene is] one of the laminates, very clearly. I mean you've got three materials all laminated together. It's the core, but it's one of the laminates'.

Gardner Group submits that I should reject any assertion that the opinion of the Gardner Group Experts and Mr Galanos is unreasonable by reason of 'at least' two factors. First, that there is no evidence that they knew ACPs were highly combustible, and it cannot be said that an opinion formed in ignorance of that fact was unreasonable. Second, reasonableness must be assessed in context and ACPs had been used in Australia on high rise buildings for 40 years without incident. Unsurprisingly given my observations above, I reject these submissions.

The evidence of the knowledge of the combustibility of polyethylene among the building surveyors was in fact mixed. Regardless, any failure to ascertain this most basic information about a substantial element of the material under scrutiny, serves to highlight a fundamental deficiency in the process by which the Relevant Practice developed. Similarly, as senior counsel for the Owners submitted, the widespread use of a product over many years without reported serious incident, is hardly a scientific or rational basis for regarding it as safe (citing asbestos as an illustration of this point). Further, as discussed above, the evidence internationally of fire hazards associated with ACPs was developing long before 2010. And concerns over their combustibility were being openly discussed in Australia by then, if not earlier. Even a casual enquiry of fire engineers at around this time is likely to have revealed these concerns.[159]

[376]

The Fifth FER

Mr Nicolas's witness statement confirms that Elenberg Fraser issued him with a set of architectural drawings by email on 26 August 2010, including a number of drawings 'that contained a materials legend noting that various parts of the façade were to be clad with "composite wall cladding - silver aluminium composite sheet"'. Mr Nicolas noted that on 13 September 2010, he attended a meeting with the MFB, along with representatives of LU Simon, Elenberg Fraser (including Mr Palmer), Gardner Group (Mr Galanos) and others to discuss the Regulation 309 application. He said that, at the meeting, the MFB raised a number of fire engineering issues that needed to be clarified in an updated fire engineering design report that would accompany the Regulation 309 application.

Thomas Nicolas's Fifth FER bears the date 'November 2010', although Mr Nicolas's evidence was that this was prepared 'between 6 and 9 December 2010'. It was circulated to the design team by email from Mr Nicolas dated 9 December 2010. This is the version of the FER that was used in support of the MFB Application, a draft of which was sent to the MFB on 9 December 2010.

MFB Application and MFB R309 Report

By a letter dated 22 February 2011, Thomas Nicolas wrote to the MFB attaching 'an application with respect to consent per Regulation 309 and Notification together with relevant architectural drawings'. Under the heading 'A. BUILDING DESCRIPTION' on the first page of the covering letter, Thomas Nicolas describes the general structure of the building as comprising 'suspended reinforced concrete floor slabs and reinforced concrete load bearing walls. Precast panel wall systems are proposed for external cladding systems'.

The walls were also incompletely described in the MFB handwritten application form which accompanied this letter. It is Mr Nicolas's handwriting. In this document, under 'Details of Construction' the 'Walls' is entered as 'CONC/MASONRY/DRY WALL'. There is no reference to ACPs.

On 29 March 2011, the MFB provided its 'Report of the Chief Officer pursuant to regulation 309 of the Building Regulations 2006' ('MFB R309 Report'). Mr Nicolas's incomplete description of the walls in the handwritten application was carried through into the first page of the report, which states: 'Construction consists of concrete floors, a combination of concrete, masonry and "dry wall" walls, and a concrete/metal roof'. And the incomplete description of the external cladding systems on the first page of the Thomas Nicolas covering letter of 22 February 2010 is repeated on the third page of the MFB R309 Report. On the other hand, the report attached a set of the current architectural drawings, which incorporated references to 'WP3 Wall Panel Type 3: Composite Panel Cladding' and 'V Composite Wall Cladding - Silver Aluminium Composite Sheet'.[161]

[396]

Once it has been established that a claim is apportionable, the Tribunal must engage in an 'exercise of the same kind of judgment as the court exercises in apportioning responsibility as between a defendant sued in tort for negligence and a plaintiff who, by his or her own negligence, has been partly responsible for the injury'.[168] The principles to be followed when conducting that exercise are set out in Podrebersek v Australian Iron & Steel Pty Ltd:[169]

The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, i.e. of the degree of departure from the standard of care of the reasonable man ... and of the relative importance of the acts of the parties in causing the damage ... It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.

As Elenberg Fraser noted in its written closing submissions,[170] the High Court in Podrebersek[171] referred to Smith v McIntyre[172]. In that case, the court identified considerations that might influence a finding of apportionment, including who created the hazard which ultimately caused the injury, the age, role and position of the person causing the damage and failing to take an obvious and available last opportunity to avoid the damage. The court emphasised the need for a broad discretionary assessment of all the circumstances:[173]

We think the true view is that there is no dichotomy between culpability and causation. A comparison of degrees of fault between two negligent actors requires an examination of the whole conduct of each in relation to the circumstances of the accident. The degree of departure from the standard of the reasonable man on the part of either should not be assessed without considering the extent to which that departure was a contributing cause of the accident. A variety of factors may enter into a judicial determination as to which party has the greater share in the responsibility for the accident. There is no single touchstone of responsibility.

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